Fund Your Utopia Without Me.™

06 February 2013

CBO: Debt Spiral Deepening, Health Costs Soaring, Historically High Unemployment, and Anemic Growth...Obamanomics Hits The Quad-fecta!

Political Cartoons by Gary Varvel

Obamanomics hits the "quad-fecta"!

The CBO released a new, shocking report (well, shocking for some) this morning.   The data that you need to know:

* Public debt by 2023 = $19.9 trillion

* Gross federal debt (public debt + $ owed to trust funds) to reach $26 trillion by 2023

* Absent changes, "debt will rise sharply relative to GDP after 2023."

Between 2014 and 2023, according to CBO estimates, annual tax receipts will soar by 65%.

Between 2014 and 2023, according to CBO estimates, revenue collected by the Federal government will average 18.9% of the economy. That's 1 point higher than the 17.9 percent average from the end of World War II to the year 2000.

*   Between 2014 and 2023, the CBO projects that defence spending will grow only modestly by ~20% and, by 2023, it will account for a mere 12% of the Federal budgetIn addition to this figure being well below the historical average and the lowest level since 1940, it is lower than the "Peace Years" following the end of the Cold War.   As a comparison, defence spending was 16.1% of the Federal budget in 1999.

Social Security will grow at 67% and spending on government healthcare programmes - starting with Medicare, Medicaid and Obamacare - will skyrocket by 94%.

*  SS, Medicare, Medicaid & Obamacare exchanges to cost $24.5 trillion from 2014-23, 52% of total fed spending.

* Unemployment to stay above 7% in 2014 for 6th straight year, "the longest period of such high unemployment in the past 70 years."

* In 2022, "7 million fewer people will have employment-based health insurance as a result of the Affordable Care Act."

* Accumulated interest payments from 2014 through 2018 are $1.76 trillion under CBO’s new baseline. Interest payments for the second five years are more than double that or about $3.64 trillion.

In 2023, it is estimated that the Federal government will spend $3.7 trillion on mandatory programmes, which amounts to 62% of the budget and more than 5 times that which will be spent on defence.

And finally, the CBO's catch-all caveat that actual reality is significantly worse than even their gloomy report suggests:

"...projections for the period covered in this report do not fully reflect long-term budgetary pressures."

Takeaway:  In the next decade, the national debt - both gross and public - will explode by 58.54%, at least 7 million Americans will lose their health plan even "if they like it" and were told that "they could keep it" (other estimates are much higher), federal healthcare spending (Social Security, Medicare, Medicaid and Obamacare) will consume more than half of the Federal budget, and unemployment will continue to remain historically - and unacceptably - high.  Let's hear it for Obamanomics!!!

 “I actually think the biggest threat to our national security is our national debt. I'm not trying to make a statement that is alarmist, but the $700 billion or so that we get for our enterprise obviously comes out of the taxpayers' money. We are responsible to the people of America, and as that debt increases, our national security budget will continue to get compressed and get smaller.”

- Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, 11 March 2011

Douglas Holtz-Eakin, the former CBO director, has run some of the numbers from the CBO report and has produced a user-friendly report.  Federal actuaries also expect growth to remain anemic in the near and medium-term future as a result of the crushing debt burden.  Of course, even stunted, anemic, sluggish growth is better than what we saw in Q4 of 2012 when the economy contracted for the first time since 2009.

Jim Pethokoukis adds a critical piece of information that puts the anticipated debt boom into perspective and context:
"The flood of new debt comes despite tax revenue from 2015 through 2023 being higher than the historical average. We have a spending problem."

Despite President Obama's various tax hikes and some moderate GDP growth, the CBO expects AVERAGE REVENUES, which is in keeping with what history shows happens after tax rises and an avalanche of burdensome regulatory red-tape. As a result, President Obama's policies will add another $9 trillion in publicly-held debt.  One EYE-OPENING example of the fallout of Obamanomics can be seen in 2023, when the CBO sees the government collecting double the tax dollars that it did in last year; yet, the annual deficit will still hit $978 billion.  As Pethokoukis succinctly states, we have a spending problem, no matter what the president may believe


Remember when they told us that Obamacare's federal subsidies would not only make health insurance universal, but would also lower health spending?  Well, per the CBO report, the 10-year cost of that programme has been revised - AGAIN - and to no one's surprise, it has increased by nearly a quarter-trillion dollars:

The Congressional Budget Office on Tuesday quietly raised the 10-year cost of ObamaCare’s insurance subsidies offered via the health law’s exchanges by $233 billion, according to a Congressional Budget Office review of its latest spending forecast.

The CBO’s new baseline estimate shows that ObamaCare subsidies offered through the insurance exchanges — which are supposed to be up and running by next January — will total more than $1 trillion through 2022, up from $814 billion over those same years in its budget forecast made a year ago. That’s an increase of nearly 29%.

The CBO upped the 10-year subsidy cost by $32 billion since just last August.

In part, this jump is because more people will get insurance via the exchanges than it had forecast. Where the CBO had seen 22 million enrolled in an exchange in 2022, it now figures 25 million will be.

That explains only part of the cost hike. The rest is largely the result of the CBO’s sharp increase in what it expects the average subsidy will be.

I've seen Obamaland and IT. DOES. NOT. WORK!

‘The Economy, Right Now, Is Headed in the Right Direction’

By Peter Kirsanow

So says President Obama.

Forget for a moment that the economy shrank last quarter. Or that the $16.5 trillion national debt is 106 percent of GDP and growing. Or that entitlements plus interest on the debt consumes more than 70 percent of all tax revenue — a figure that’s also growing. 

Whatever may be going in the right direction is outweighed by those things going in the wrong direction.

Four years into the Obama presidency, more people are dropping out of the workforce than are finding jobs. The labor participation rate has been stuck at historic lows for more than a year and long-term unemployment remains the worst since the Great Depression. Indeed, if the labor participation rate were the same as when Obama took office, the unemployment rate today would be near 11 percent. Over 8 million more people are without jobs than when President Obama first took the oath of office — and that number is growing, not shrinking. 

Median household incomes continue to plummet, down more than 8 percent in the last four years. Gas prices set a record high for February and health-insurance premiums are spiking. Unsurprisingly, the number of Americans living in poverty continues to skyrocket, with 11 million more people in poverty than at the outset of this administration. A record 9 million people are receiving federal disability benefits – twice as many as just 15 years ago. The number of people receiving foodstamps continues to rise — to a record 47.5 million. College graduates continue to face bleak employment prospects and the number of twenty-somethings living with their parents continues to grow.

These problems are trending in the wrong direction. These are the aspects of the economy that affect the people the president claims to champion. Yet he persists in making assertions untethered to reality. 

And we’re supposed to be okay with letting this man decide which of us gets assassinated?

Well, what difference, at this point, does it make?

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